You may have heard that champion boxer Floyd Mayweather loves cryptocurrencies: He's posted about them twice on social media within the last month. What you may not know is that while Mayweather's first crypto post on Instagram, which came in late July, may have been organic, there was a marketing company behind the second.
That company, called the Crypto Media Group, wants celebrity endorsements to be the new standard for advertising digital tokens to the masses. It's a controversial move since many critics already see the market as being dangerously over-hyped. Nonetheless, the timing of Mayweather's promotion seems geared for maximum attention: He's fighting UFC star Conor McGregor in a highly-publicized exhibition match on Saturday.
What tipped me off to Mayweather's new business promoting Initial Coin Offerings, or ICOs—crowd sales to fund ethereum apps that can rake in millions of dollars without deploying a single line of code—was a hashtag. On Wednesday, just days before his fight against McGregor, Mayweather posted a tweet promoting a soon-to-launch ICO by a Norwegian startup called Hubii. Tellingly, the tweet was tagged "#ad," indicating it was a paid spot, and "#CryptoMediaGroup."
The company behind the ad, the Crypto Media Group, has no social media presence and its website is just a contact page. When I called the company's founder, CEO Logan Schauer, he told me that the company has existed for exactly five days. They were able to pull together the Mayweather and Hubii deal, he said, due to mutual connections and previous experience in digital media advertising.
"Our goal is to take [the ICO market] from this very small industry of cryptocurrency-focused investors and take it to the masses," Schauer said over the phone. "We want to help the market transition from where it is now—word-of-mouth spreading through the crypto community—and we want to bridge that gap to the mainstream world."
Schauer declined to speak to the structure of Mayweather's compensation due to confidentiality agreements. Schauer said that Mayweather will be receiving Hubii tokens, but wouldn't elaborate. The Hubii site states that the token ICO is closed to US-based investors like Mayweather. The Crypto Media Group will also receive Hubii tokens as part of their payment. "Our marketing is our investment," Schauer said.
Mayweather's management team did not respond to multiple requests for comment over email.
The playbook for the Crypto Media Group looks something like this, according to Schauer: First, the celebrity partner posts their message to social media. Then, a network of social media accounts controlled by the Crypto Media Group shares the promotion to raise awareness. According to Schauer, this network of accounts has more than 100 million followers across Facebook, Twitter, and Instagram. The company also negotiates shares with accounts they don't own through "value-for-value" trades—offering in-kind promotion for sharing the Crypto Media Group ad. Basically, saturating social media with a celebrity endorsement engineered by the company.
A celebrity like Mayweather promoting a crowdsale is far and above most ICO media strategies: They tend to consist of Reddit posts, a Twitter account, and coverage in cryptocurrency trade publications. But professional athletes promoting ICOs isn't just a sea change for the cryptocurrency world. Normally, you see celebrities hawking products that already exist, like a soft drink or a sneaker. In this case, Mayweather is pumping up a fundraiser for a product that hasn't been released.
Generally speaking, the more people buy tokens during an ICO and trade them, the more valuable they become. Mayweather and the Crypto Media Group will both reap the financial rewards from a successful Hubii ICO.
Normally, you see celebrities hawking products that already exist, like a soft drink or a sneaker
At the time of writing, the Hubii ICO has raised more than $1,300,000 USD and issued more than three million tokens in about 48 hours. The sale will end on September 7. Schauer said that the company is preparing for another round of Mayweather promotions, and that another celebrity athlete whom Schauer wouldn't name has apparently already reached out for a partnership.
Hubii already exists as a news aggregator, and the idea behind creating tokens is for people to use them to pay for content online. For example, someone could create a podcast and write a smart contract that says when a media outlet embeds or shares the podcast, they pay the creator in Hubii tokens. Hubii's advisory board, the company claims on its website, includes former Reuters editor-in-chief David Schlesinger. All of this, plus Mayweather's mainstream appeal, may virtually guarantee a profitable ICO, but it doesn't ensure that Hubii's idea will take off.
Many ICOs are less legitimate-sounding than Hubii, and these endeavours have come to define the ICO market as a Wild West saturated with half-baked, get-rich-quick token schemes. The Crypto Media Group wants to legitimize the ICO market, Schnauer said, by only promoting ICOs that aren't sketchy. "If we're going to do a deal with an ICO, it's because we like them and we think it's feasible," Schauer said.
What's clear is that the Crypto Media Group wants to be on the forefront of big-budget, mainstream advertising for cryptocurrencies and ICOs. If they succeed, we may see more famous faces hawking imaginary money.
Get six of our favorite Motherboard stories every day by signing up for our newsletter.